What is the Euro debt crisis?
The 'Eurozone' is the name given to the 17 European countries which use the Euro as their official currency, including Ireland, Spain, Germany, Portugal and Greece. The debt crisis basically came about because several Eurozone countries have lost control of their finances since the global recession - borrowing and spending more than they could realistically afford.
As a result of this, other European countries have had to bail them out - to the tune of billions of Euros. Greece was the first country to accept a bailout in May 2010, followed by Ireland and Portugal.
However, before these loans were approved, the Governments of these countries had to agree to adopt 'austerity measures' to show they were doing what they can to tackle their economic problems themselves. This has led to mass public protests in Greece, with many people demonstrating against more job losses and tax rises as a result.
A major concern is that if Greece is unable to keep repaying what it owes to other countries, the country could effectively go bankrupt - which would have an even more damaging effect on Greece's economy, and restrict its citizens' spending power even more.
This could also have a knock-on effect on other Eurozone countries. It could damage their credit rating, meaning their Governments would have to pay more to borrow money - and might have to introduce their own austerity measures.
How could the Euro crisis affect the UK?
But where does the UK come into all of this? After all, the UK is not actually in the Eurozone.
However, Greece has borrowed money from some British banks - which could cost them billions if Greece does eventually go bankrupt. Moreover, the banks could lose even more if countries like Italy and Spain were affected.
If this is the case, the UK - and other countries - could see another credit crunch, making it much harder for both individuals and businesses looking for mortgages, loans and other forms of credit.
Plus, most of the UK's exports go to European countries, so the more those countries are struggling, the more likely we are to see exports from British companies fall, which would be bad news for our economy.
